<PAGE> 1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT TO REPORT FILED
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
AMENDMENT NO. 1
SEPTEMBER 26, 1996
Date of report (date of earliest event reported)
SPSS INC.
(Exact name of registrant as specified in charter)
<TABLE>
<S><C>
DELAWARE 33-64732 36-2815480
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
</TABLE>
444 N. MICHIGAN AVENUE
CHICAGO, ILLINOIS 60611
(Address of Principal Executive Offices, Including Zip Code)
(312) 329-2400
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
- --------------------------------------------------------------------------------
<PAGE> 2
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Report on Form 8-K dated
September 26, 1996 as set forth in the pages attached hereto.
Item 7. Financial Statements and Exhibits. The financial statements are
amended by filing the following financial statements and pro forma financial
information:
(a) Financial statements of business acquired:
FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<S> <C>
FINANCIAL STATEMENTS
CLEAR SOFTWARE INC.
Independent Auditors' Report F-1
Balance Sheet as of December 31, 1995 F-2
Statement of Income and Retained Earnings for the year ended December 31, 1995 F-3
Statement of Cash Flows for the year ended December 31, 1995 F-4
Notes to Financial Statements F-5 - F-7
Balance Sheet as of June 30, 1996 (unaudited) F-8
Statements of Income for the six months ended June 30, 1995 (unaudited) and 1996
(unaudited) F-9
Statements of Cash Flows for the six months ended June 30, 1995
(unaudited) and 1996 (unaudited) F-10
Notes to Unaudited Financial Statements F-11
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINING FINANCIAL STATEMENTS
Unaudited Pro Forma Condensed Consolidated Combining Balance Sheet as of
June 30, 1996 F-12
Unaudited Pro Forma Condensed Consolidated Combining Statement of Income for the
year ended December 31, 1995 F-13
Unaudited Pro Forma Condensed Consolidated Combining Statement of Income for the
six months ended June 30, 1996. F-14
Notes to Unaudited Pro Forma Condensed Consolidated Combining Financial F-15
Statements
EXHIBITS
Independent Auditors' Consent 23.1
</TABLE>
- 2 -
<PAGE> 3
Independent Auditors' Report
The Board of Directors
Clear Software, Inc.:
We have audited the accompanying balance sheet of Clear Software, Inc., as of
December 31, 1995, and the related statements of income and retained earnings
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clear Software, Inc. at
December 31, 1995, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
August 9, 1996
F-1
<PAGE> 4
CLEAR SOFTWARE, INC.
Balance Sheet
December 31, 1995
Assets (note 5)
---------------
<TABLE>
<S> <C>
Current assets:
Cash $145,566
Trade accounts receivable, net of allowance for
doubtful accounts of $15,000 (note 9) 291,256
Inventory 24,340
--------
Total current assets 461,162
Property and equipment, net (notes 2 and 3) 5,083
--------
Total assets $466,245
========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $271,083
Accrued expenses 1,967
--------
Total current liabilities 273,050
--------
Commitments (note 4)
Stockholders' equity:
Common stock, $.001 par value, authorized 300,000 shares, issued
and outstanding 106,500 shares 107
Additional paid-in capital 16,193
Retained earnings 176,895
--------
Total stockholders' equity 193,195
--------
Total liabilities and stockholders' equity $466,245
========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE> 5
CLEAR SOFTWARE, INC.
Statement of Income and Retained Earnings
Year ended December 31, 1995
<TABLE>
<S> <C>
Net revenues (note 9) $2,755,265
----------
Operating expenses:
Direct cost of revenues 206,136
Sales and marketing 1,772,201
Research and development 315,515
General and administrative 402,583
----------
Total operating expenses 2,696,435
----------
Operating income 58,830
----------
Other income (expense):
Interest income 1,066
Interest expense (note 5) (1,963)
Payments to a related party (note 6) (45,000)
----------
Total other expense (45,897)
----------
Net income 12,933
Retained earnings, beginning of year 175,802
Less dividends (11,840)
----------
Retained earnings, end of year $176,895
==========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 6
CLEAR SOFTWARE, INC.
Statement of Cash Flows
Year ended December 31, 1995
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $12,933
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 21,455
Stock option compensation expense 15,300
Changes in operating asset/liability accounts:
Accounts receivable (5,344)
Inventory (21,362)
Accounts payable 99,208
Accrued expenses (5,724)
--------
Net cash provided by operating activities 116,466
--------
Cash flows from investing activities:
Purchase of property and equipment (17,511)
--------
Net cash used in investing activities (17,511)
--------
Cash flows from financing activities:
Repayment of notes payable (7,200)
Dividends (11,840)
--------
Net cash used in financing activities (19,040)
--------
Net increase in cash 79,915
Cash at beginning of year 65,651
--------
Cash at end of year $145,566
========
Supplemental disclosure of cash flow information:
Cash paid for interest $181
========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 7
CLEAR SOFTWARE, INC.
Notes to Financial Statements
December 31, 1995
(1) NATURE OF BUSINESS
Clear Software, Inc. ("Clear" or the "Company") develops, markets, and
sells diagramming and flowcharting applications designed for
non-technical professionals. The Company, established in 1987, is
located in Newton, Massachusetts. The primary product, all Clear,
automatically draws charts or decision trees from text to help
businesses document their critical procedures.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Revenue Recognition
The Company recognizes revenues from software sales upon shipment of
the software.
(b) Property and Equipment
Property and equipment are stated at cost. Depreciation is calculated on
the straight-line method over the estimated useful lives of the assets
(three to seven years).
(c) Research and Development Costs
Research and development costs are charged to expense as incurred.
(d) Income Taxes
The Company is an S Corporation for income tax purposes; therefore,
federal and state income taxes are borne by the stockholders.
Distributions to shareholders are made to cover their additional
personal tax liabilities due to corporate income.
(e) Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure
of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(3) PROPERTY AND EQUIPMENT
Property and equipment and the related accumulated depreciation consist of
the following
<TABLE>
<S> <C>
Computer equipment $101,535
Office furniture and equipment 7,293
--------
108,828
Less accumulated depreciation 103,745
--------
$ 5,083
========
(Continued)
F-5
</TABLE>
<PAGE> 8
CLEAR SOFTWARE, INC.
Notes to Financial Statements
(4) LEASES
The Company leases office facilities and certain equipment under
noncancelable operating leases expiring in 1998. The future minimum
lease payments under these leases are as follows:
<TABLE>
<CAPTION>
Year
----
<S> <C>
1996 $ 102,774
1997 100,023
1998 3,180
---------
Total future minimum lease payments $ 205,977
=========
</TABLE>
Rent expense amounted to $80,477 for the year ended December 31, 1995.
(5) NOTE PAYABLE TO BANK
Note payable to bank consists of borrowings under a $100,000
line-of-credit agreement. Interest is payable monthly at an annual
rate equal to 2% above the Bank's lending rate (9% at December 31,
1995). The line-of-credit is secured by the assets of the Company and
is guaranteed by certain shareholders. At December 31, 1995, there
were no outstanding borrowings under this agreement.
(6) RELATED PARTY TRANSACTIONS
The Company is related by common ownership to BZIX Development, Inc.
("BZIX") which developed the programming code for the Company's
original products. These products are no longer sold by the Company.
During 1995, the Company entered into a settlement agreement with BZIX
granting the Company the license to BZIX's programming code. The
settlement agreement requires a payment of $22,500 at execution and a
maximum monthly payment of $7,500 to BZIX for two years. The license
is considered fully paid upon the sale of the Company. During 1995,
the Company incurred expenses of $45,000 in accordance with the
agreement.
(7) STOCK OPTIONS
During 1995, the Company granted 10,500 non-qualified stock options to
three key employees at an exercise price of $.20. The options
may be exercised at various dates as specified at the time of the grant
and vest over a five month period. All options vest 100% in the event
of a change in control of ownership. If the employee's term of
employment ends, any outstanding options are canceled. At December 31,
1995, 8,500 shares were exercisable.
(Continued)
F-6
<PAGE> 9
CLEAR SOFTWARE, INC.
Notes to Financial Statements
(8) BENEFIT PLAN
In January 1996, the Company established a 401(K) plan (the "Plan")
covering all eligible employees who qualify based on age and length of
service requirements. The Plan allows employees to defer a percentage
of their annual salary. The Company may also match a percentage of
employee contributions.
(9) SIGNIFICANT CUSTOMER
One customer accounted for 22% of net sales in 1995. Included in
accounts receivable as of December 31, 1995 are amounts due from this
customer of approximately $135,000.
(10) SALE OF COMPANY
The Company is in the process of finalizing an agreement to sell all
of its outstanding common stock to SPSS, Inc. A definitive agreement
is expected to be signed in September 1996.
F-7
<PAGE> 10
CLEAR SOFTWARE INC.
Balance Sheet
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 133,696
Accounts receivable, net of allowances of $15,000 410,832
Inventory 21,270
Other assets 22,710
---------
Total current assets 588,508
Property and equipment, net 11,033
---------
$ 599,541
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 187,108
Accrued expenses 1,511
---------
Total current liabilities 188,619
---------
Stockholders' equity:
Common stock, $.001 par value, authorized 300,000 shares, issued
and outstanding 106,500 shares 107
Additional paid-in capital 16,193
Retained earnings 394,622
---------
Total stockholders' equity 410,922
---------
$ 599,541
=========
</TABLE>
See accompanying notes to unaudited financial statements.
F-8
<PAGE> 11
CLEAR SOFTWARE INC.
Statements of Income
Six months ended June 30, 1995 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Net revenues $1,442,280 $1,659,858
Cost of revenues 87,561 93,143
---------- ----------
Gross profit 1,354,719 1,566,715
---------- ----------
Operating expenses:
Sales and marketing 836,307 972,757
Product development 139,794 176,650
General and administrative 149,988 161,582
---------- ----------
Operating expenses 1,126,089 1,310,989
---------- ----------
Operating income 228,630 255,726
---------- ----------
Other income (expense):
Interest income 802 149
Interest expense (988) (648)
Other - (37,500)
---------- ----------
Other income (expense) (187) (37,999)
---------- ----------
Income before income taxes 228,444 217,727
Income tax expense - -
---------- ----------
Net income $ 228,444 $ 217,727
========== ==========
</TABLE>
See accompanying notes to unaudited financial statements.
F-9
<PAGE> 12
CLEAR SOFTWARE INC.
Statements of Cash Flows
Six months ended June 30, 1995 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 228,444 $217,727
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in operating asset/liability accounts:
Accounts receivable (48,769) (119,576)
Inventories (18,504) 3,070
Accounts payable (58,774) (83,975)
Accrued expenses (6,120) (455)
Other - (22,710)
--------- --------
Net cash provided by (used in) operating activities 96,277 (5,919)
--------- --------
Cash flows from investing activities:
Purchase of property and equipment (5,243) (5,951)
--------- --------
Net cash used in investing activities (5,243) (5,951)
--------- --------
Cash flows from financing activities:
Repayment of notes payable (7,200) -
Dividends (11,840) -
--------- --------
Net cash used in financing activities (19,040) -
--------- --------
Net change in cash and cash equivalents 71,994 (11,870)
Cash and cash equivalents at beginning of period 65,651 145,566
--------- --------
Cash and cash equivalents at end of period $ 137,645 $133,696
========= ========
Supplemental disclosures of cash flow information:
Interest Paid $ 1,660 $ 648
========= ========
</TABLE>
See accompanying notes to unaudited financial statements.
F-10
<PAGE> 13
CLEAR SOFTWARE INC.
Notes to Unaudited Financial Statements
- --------------------------------------------------------------------------------
(1) BASIS OF PRESENTATION
The accompanying unaudited interim financial statements reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of the results of the interim periods presented. All such
adjustments are of a normal recurring nature.
These financial statements should be read in conjunction with the Company's
audited financial statements and notes thereto for the year ended
December 31, 1995 included elsewhere herein.
F-11
<PAGE> 14
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
COMBINING BALANCE SHEET
JUNE 30, 1996
(in thousands)
<TABLE>
<CAPTION>
Clear Pro Forma SPSS Inc.
SPSS Inc. Software Adjustments Pro Forma
--------- -------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash & cash equivalents $ 11,511 $ 134 $ - $ 11,645
Accounts receivable, net 12,083 411 - 12,494
Other current assets 3,301 44 - 3,345
--------- ------- ---- --------
Total current assets 26,895 589 - 27,484
--------- ------- ---- --------
Net equipment and leasehold improvements 4,977 11 - 4,988
Capitalized software development costs, net 6,748 - - 6,748
Other assets 3,878 - - 3,878
--------- ------- ---- --------
Total assets $ 42,498 $ 600 $ - $ 43,098
========= ======= ==== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accruals $ 13,628 $ 189 $ - $ 13,817
Deferred revenues 5,348 - - 5,348
--------- ------- ---- --------
Total current liabilities 18,976 189 - 19,165
--------- ------- ---- --------
Other non-current liabilities 2,177 - - 2,177
Stockholders' equity 21,345 411 - 21,756
--------- ------- ---- --------
Total liabilities and stockholders' equity $ 42,498 $ 600 $ - $ 43,098
========= ======= ==== ========
</TABLE>
See notes to unaudited pro forma condensed consolidated combining financial
statements.
F-12
<PAGE> 15
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
COMBINING STATEMENT OF INCOME
Year Ended December 31, 1995
(in thousands, except share data)
<TABLE>
<CAPTION>
Clear Pro Forma SPSS Inc.
SPSS Inc. Software Adjustments Pro Forma
--------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues:
Desktop products $ 46,101 $ 2,755 $ - $ 48,856
Large System products 10,694 - - 10,694
Other products and service 6,234 - - 6,234
------------ ------- ------ ---------
Net revenues 63,029 2,755 - 65,784
Cost of revenues 6,177 206 - 6,383
------------ ------- ------ ---------
Gross profit 56,852 2,549 - 59,401
------------ ------- ------ ---------
Operating expenses:
Sales and marketing 33,287 1,772 - 35,059
Product development 8,614 315 - 8,929
General and administrative 4,446 403 - 4,849
Nonrecurring items 2,466 - - 2,466
Acquisition-related charges 1,051 - - 1,051
------------ ------- ------ ---------
Operating expenses 49,864 2,490 - 52,354
------------ ------- ------ ---------
Operating income 6,988 59 - 7,047
------------ ------- ------ ---------
Other income (expense):
Net interest income (expense) 172 (1) - 171
Other 177 (45) - 132
------------ ------- ------ ---------
Other income (expense) 349 (46) - 303
------------ ------- ------ ---------
Income before income taxes 7,337 13 - 7,350
Income tax expense 2,968 - - 2,968
------------ ------- ------ ---------
Net income $ 4,369 $ 13 $ - $ 4,382
============ ======= ====== =========
Net income per share $ 0.57 $ 0.12 $ - $ 0.56
============ ======= ====== =========
Shares used in computing net income per share 7,598,739 107,984 - 7,768,740
============ ======= ====== =========
</TABLE>
See notes to unaudited pro forma condensed consolidated combining financial
statements.
F-13
<PAGE> 16
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
COMBINING STATEMENT OF INCOME
Six Months Ended June 30, 1996
(in thousands, except share data)
<TABLE>
<CAPTION>
Clear Pro Forma SPSS Inc.
SPSS Inc. Software Adjustments Pro Forma
--------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues:
Desktop products $ 25,619 $ 1,660 $ - $ 27,279
Large System products 5,467 - - 5,467
Other products and service 3,130 - - 3,130
---------- -------- ------ ----------
Net revenues 34,216 1,660 - 35,876
Cost of revenues 3,303 93 - 3,396
---------- -------- ------ ----------
Gross profit 30,913 1,567 - 32,480
---------- -------- ------ ----------
Operating expenses:
Sales and marketing 17,613 973 - 18,586
Product development 5,283 177 - 5,460
General and administrative 2,521 162 - 2,683
---------- -------- ------ ----------
Operating expenses 25,417 1,312 - 26,729
---------- -------- ------ ----------
Operating income 5,496 255 - 5,751
---------- -------- ------ ----------
Other income (expense):
Net interest income 225 (1) - 224
Other (69) (37) - (106)
---------- -------- ------ ----------
Other income (expense) 156 (38) - 118
---------- -------- ------ ----------
Income before income taxes 5,652 217 - 5,869
Income tax expense 1,929 - - 1,929
---------- -------- ------ ----------
Net income $ 3,723 $ 217 $ - $ 3,940
========== ======== ====== ==========
Net income per share $ 0.48 $ 1.88 $ - $ 0.49
========== ======== ====== ==========
Shares used in computing net income per share 7,818,397 115,950 - 8,001,963
========== ======== ====== ==========
</TABLE>
See notes to unaudited pro forma condensed consolidated combining financial
statements.
F-14
<PAGE> 17
SPSS INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidated
Combining Financial Statements
- -------------------------------------------------------------------------------
NOTE A - DESCRIPTION OF BUSINESS COMBINATION
On September 26, 1996, SPSS acquired all of the outstanding common stock of
Clear Software Inc., for 183,833 shares of SPSS Inc. common stock. The
accompanying pro forma financial statements give effect to the merger applying
the pooling-of-interests method of accounting.
NOTE B - COSTS OF THE BUSINESS COMBINATION
The unaudited pro forma condensed consolidated combining financial statements
do not include any adjustments relating to costs associated with the business
combination.
F-15
<PAGE> 18
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
SPSS INC.
(Registrant)
By: /s/ Robert Brinkmann
--------------------
Controller
Date: October 31, 1996
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the inclusion of our report dated August 9, 1996 relating to the
balance sheet of Clear Software, Inc. as of December 31, 1995 and the related
statements of income and retained earnings, and cash flows for the year then
ended, which report appears in the Form 8-K of SPSS Inc. dated September 26,
1996.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
October 31, 1996
